A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. You may have to pay an early repayment charge to your existing lender when you remortgage.
Remortgaging your home to a better deal can save you hundreds of pounds, and the process doesn’t have to be difficult. Discover how it works with expert tips from our advisers.
Please remember that a mortgage is a loan secured against your home. Your home may be repossessed if you do not maintain repayments on your mortgage or any other load secured against it. You may have to pay an early repayment charge to your existing lender when you remortgage. And always a good idea to speak with an experienced mortgage broker who can talk you through the process, and understand the options and what they will mean for you.
What is a remortgage?
When you remortgage, you replace your current mortgage product with a new one.
A remortgage may be done for several reasons:
- To get a lower product rate, for example, if your initial product deal is coming to an end and you do not want the rate to jump to the higher Standard Variable Rate (SVR)
- To raise money that you can use for building works to improve your home, such as a new kitchen or a loft extension
- To raise funds for a deposit to purchase another property
- To consolidate (or pay off) other more expensive debts , such as credit cards or personal loans.
When you change the mortgage product, you can either stay with your current lender or switch to a different one.
How long does it typically take to remortgage?
The amount of time it takes to remortgage varies depending on individual circumstances but it is typically between 3 to 8 weeks, and it can also take several weeks for more complex cases.
Once you submit the mortgage application, the lender will reserve the new product rate for you. This means that even if interest rates continue to increase, you will not miss out on the deal that you have applied for.
When the mortgage application is submitted, the mortgage lender will complete a number of internal checks, called “underwriting”. If and when these checks are successful they will issue a mortgage offer to you.
Once you have received your new mortgage offer, you can then instruct your new mortgage lender to put the new deal in place or “complete”. You would typically only want to complete it on the day after your current deal will expire. Unless you already are on the lender SVR, at which point you may want to complete it as soon as possible after receiving the mortgage offer.
A mortgage offer is typically valid for a period of 6 months.
So you would typically start a remortgage application 6 months before the expiry of your current deal, in order to ensure that you have plenty of time to review the best available options, and to secure yourself a good deal.
What are the steps involved with a remortgage?
Step 1 – Review your existing mortgage to check if any exit penalties apply
If you remortgage before your initial period ends, you may have to pay an early repayment charge (ERC). This would be a percentage of your current mortgage balance and is set out in the terms and conditions of your mortgage. If you’re unsure how much it would amount to, speak with your lender or ask a mortgage broker to check for you.
Step 2 – Get a realistic estimate of your home’s current value
A low loan to value (LTV) will help you secure a more favourable mortgage deal.
The Loan to Value (LTV) is the ratio between the outstanding mortgage loan and the value of the property.
The price of your home might have risen or fallen since its purchase. Ask an estate agent for a valuation or look up property websites. By doing this research, you will get a more realistic assessment of the value of your property, and you may be able to start looking for deals that will apply to your property LTV.
Please remember that a mortgage lender will always carry out their own valuation before issuing a mortgage offer. And they will use their valuation to determine the LTV and the applicable product rate. Therefore, you will want to be realistic when you first do your own valuation assessment.
Step 3 – Review your credit history
If you only remortgage with your current lender and don’t make any changes to the length of your mortgage or type, they may not check your credit history. If you do make changes, though, a lender will always look at your credit history and score. Your credit history is basically a detailed record of all things related to both your credit and debts that typically stretches back over the past 6 years.
Your credit score includes factors such as how well you have kept up with any debt payments. And it is negatively impacted if you missed any repayments on your things like credit cards, loans and utility bills. Generally speaking, your credit score will also reduce every time you apply for new credit, thus be mindful about frequent applications for things like credit cards, personal loans and mortgage applications. If you apply for a lot of these within a short period of time, your credit score can reduce significantly.
A low credit score can eventually prevent you from being successful with a mortgage application.
Your credit history is recorded at the credit reference agencies, or credit bureaux, where you can also check your credit report for free.
You can get a free “statutory” credit report from the likes of CheckMyFile, Equifax, Experian and TransUnion.
Before you remortgage, take a look at your credit report and see if there’s anything that you can do to improve it. If in doubt speak to an experienced mortgage broker, who may be able to recommend a suitable course of action.
Step 4 – Find the next best mortgage deal that you qualify for.
There are three main ways to find a remortgage deal:
- You can contact your current lender; this option may be an easy one; however, you could end up missing out on a better deal from another lender.
- Check comparison websites; you can get a good idea of what deals are on the market; however, keep in mind that depending on your individual situation, you may not qualify for a certain deal advertised. Furthermore, specialist lenders may not make their products available through comparison websites.
- Speak with a mortgage broker. A mortgage broker can source the deal for you, and also check that you meet the affordability requirements and the underwriting criteria for the new deal. A mortgage broker will also submit the mortgage application on your behalf, and help you manage the entire process until your new mortgage deal is in place.
The benefits of using a mortgage broker
At Your Mortgage Experts, we have more than 90 different lenders partners and can source from more than 1000s deals.
If your circumstances are more complex such as when you are self-employed or if your credit score is less than perfect- a broker such a Your Mortgage Experts can still assist you and may offer opportunities that wouldn’t otherwise be available other than with lenders that only deal through a broker.
If you want to be successful in securing your next remortgage deal, the key is preparation and the right guidance and support from an expert.
For questions or more information, please call us at 0208 154 1111 to speak with Your Mortgage Experts.
Or you can email us at firstname.lastname@example.org
Your Mortgage Experts, London W9 2HQ.
Luca BertolinoMortgage Expert
Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.